US hop acreage grows 95% in five years

Hop acreage in the US has nearly doubled in the last five years driven by consumer tastes for higher hopped beers, despite beer production declining, but its continued rise is not without concern.

In 2016 US hop acreage grew by 17% to 52,963, with an additional 5,185 acres expected to take the total to 58,148 acres in 2017.

According to figures released by Hop Growers of America, US acreage of hops in 2012 stood at 29,683. In 2016 this figure stood at 52,963, having increased by 17% from 45,238 in 2015, with an additional 5,185 acres expected to take the total to 58,148 acres in 2017.

“To put it into perspective, the US acres added in the last five years is larger than the total acreage of any other hop-growing country in the world, outside of our own and Germany, the two largest hop-producing countries,” said Ann George, the executive Director of Hop Growers of America (HGA). “Further, our estimated 2017 acreage increase (5,185 acres – a 9.8 % growth) by itself is larger than other individual countries’ total acreage outside of the U.S., Germany, and the Czech Republic.”

The US has been the largest hop producer since 2015, when it over took Germany’s total hop acreage for the first time. The third largest producer is the Czech Republic with 11,800 acres, followed by China with 4,942 acres.

SUPPLY AND DEMAND

While the US hop market is far more stable than in past years, benefitting from high demand and a diversified customer base, the HGA has urged producers to remain “responsible and realistic” when contracting hops to ensure supply and demand are kept in balance.

“When a brewery has a hop variety they depend on and is crucial to their operation, it is dangerous to rely solely on the spot market,” said Patrick Smith, vice president of hop grower B.T. Loftus Ranches, Inc.

“Growers rely on forward contracts to plan their acreage for many years out into the future. However, contracting an excessive amount above their needs is not wise either as brewers can be left with expensive hops that they may not be able to sell to other brewers. Over-contracting can also lead to a surplus in the market which tends to discourage future investments in productive capacity and leads to increasing market instability. A surplus can be just as disruptive to the market as a shortage.”

In addition to acreage increasing in the US, stocks left in storage with brewers, growers and merchants are increasing as well, with the USDA NASS March 2017 report showing a 9% increase in 2016, and a 7.5% increase the year before that.

“It is important to note that the amount of hop stocks which dealers are holding has increased,” added George. “Merchants are taking on increased risk as the proportion of stocks held in their possession has risen over 10% in the past three years. The stock report is another key signal to the market and we will continue to monitor these data trends.”